Crypto Crash: Why Bitcoin, Ethereum, and Dogecoin Are Falling Today
The crypto sell-off continued today, as investors continued to shun riskier assets amid high levels of inflation and the Federal Reserve's ongoing tightening of its monetary policy. The entire cryptocurrency market recently lost $200 billion in a single day.
Over the last 24 hours, the price of the world's largest cryptocurrency, Bitcoin (CRYPTO: BTC), traded down roughly 2.5% as of 12:57 p.m. ET. The price of Bitcoin is currently hovering below $30,000. The world's second-largest cryptocurrency, Ethereum (CRYPTO: ETH), had fallen more than 9%, with the price of one token now around $2,000. Finally, the meme token Dogecoin (CRYPTO: DOGE) traded about 5% lower.
The Fed has now raised its overnight benchmark lending rate, the federal funds rate, by roughly 0.75% in just two meetings, including a full half-point move at its latest meeting. When interest rates rise, so do the yields on safer assets like U.S. Treasury bills, which are backed by the U.S. government. This leads investors to demand higher returns from riskier assets and turn away from riskier assets if they don't see a path to those higher returns.
Source Fool.com
